PJM files expanded compliance plan with FERC, easing renewable concerns
PJM Interconnection this week submitted a compliance filing for a December 2019 Federal Energy Regulatory Commission (FERC) order that demanded expansion of the minimum offer pricing rule (MOPR) used in capacity auctions.
These moves were meant to guarantee providers bid into PJM’s capacity market at real cost. Before this, PJM’s use of the MOPR applied only to new natural gas-fired resources. That fact had alarmed groups like the Electric Power Supply Association (EPSA) and the Wind Energy Association (WEA), who saw it as a roadblock to the retirement of older, higher-emitting generation resources and a switch to more efficient plants. Now, both groups have lauded PJM’s efforts as diligent, quick, and inclusive, having considered stakeholders when crafting the new compliance filing.
“FERC’s December ruling to apply the MOPR to an extended set of subsidized resources in PJM’s capacity market was at core an effort to make sure competitive electricity markets work for power providers, grid reliability, and most importantly, consumers,” Todd Snitchler, president and CEO of the EPSA, said. “Competition among power generators has resulted in record low prices, reliable electricity, and even driven emissions reductions through more efficient operations and market-driven fuel-switching. That’s a win for consumers and our environment.”
PJM’s actions, specifically, will go a long way to getting the market back to normal operation, in EPSA’s view. The organization was an active participant in discussions surrounding the plan. AWEA also lauded the efforts, noting that the proposal offers flexibility for renewable resources to showcase their low costs and reliability.
“PJM’s compliance filing is an important step towards renewable resources participating in the PJM capacity market,” Georgios Papadimitriou, head of Enel Green Power North America and AWEA Board Member, said. “The filing appropriately recognizes the rapidly decreasing costs of developing large-scale renewable projects and gives developers the ability to prove the competitiveness of their projects. Enel Green Power appreciates PJM’s engagement with the renewable community and looks forward to continued active participation in PJM.”
Specifically, the new filing sets the Net Cost of New Entry and Net Avoidable Cost Rate values for necessary resource classes, offers flexibility for unit-specific offer reviews, addresses situations where resources elect competitive exemption and receive a subsidy later, strives for balanced auction timing and requests that FERC provides no less than 35 days for comment, beyond the usual 21 days.
Along with this filing, PJM proposed to run its 2022/2023 Delivery Year auction six months after FERC approves that filing, and to add limited additional time if state-legislated changes are required.
For its part, EPSA has looked at this as a good first step and now wants to move forward with an auction as quickly as possible.
“The auction is an essential tool for power generators and investors to make critical decisions about whether to maintain, upgrade, retire, or invest in new technologies and resources,” EPSA said. “Without the data an auction provides, generators, states, and others cannot have an evidence-based discussion about the best path forward. While EPSA understands PJM’s proposed timeline of six months, we urge FERC to shorten the time between a final order and holding the first, long-delayed auction to no more than four months. Market exit is just as important as market entry for achieving the right resources mix and meeting evolving energy policy goals.”
PJM notes that the ability to run subsequent auctions in six-month time frames would help it maintain an orderly process and set about the foundations of a normal auction schedule. It has separately requested FERC to reconsider some aspects of its order related to competitive auctions, though it notes it can run them in the short term.
